Reference no: EM133045864
Response to below discussion
The Boston Consulting Group (BCG) matrix was developed as a tool to develop business and marketing strategies. The BCG matrix measures a company's products strategic position and potential for growth to determine which ones should be invested in or terminated (Guest, 2019, p. 96).
The BCG matrix could be used to categorize business units by placing them in four different sections of the matrix, which represent a company's portfolios. The categories are stars, question marks, cash cows and dogs (Guest, 2019, pp. 96-97).
A business unit in the star category would have a good percentage of the market share in a rapidly expanding industry (Guest, 2019, pp. 96-97). They profit, but not without a great deal of investment. A business unit in the question mark category is a rapidly expanding industry but with a low percentage of market share (Guest, 2019, pp. 96-97). The dog category represents a business unit with a lower percentage of market share in an industry that is slowly growing (Guest, 2019, p. 96). In other words, a low-return business unit in an industry with very little expectation for future greater returns. The last category is a cash cow, and this is a business unit in a category with slower growth but a good percentage of the market share (Guest, 2019, pp. 96-97). Cash cows generate large profits with little investment and can be used to fund other business units.
In the Baldwin simulation company, we could apply BCG matrix tool and strategies to grow our company's business units and decide how to invest the limited funds. For example, if one of the products needs very little investment but generates huge returns then we could categorize that as a cash cow. The profits from that industry could be used to fund R&D for products in other industries with further analysis. We would need to make sure that we categorize the business unit for each category to make sure we invest the funds in areas with the greatest expected return on investment.
During the practice simulation it was difficult at first to determine which product would have the greatest chance of future success. Using a matrix like the BCG would make it easier to quickly evaluate products and industries to makes business investment decisions for our companies.